Why horizon scanning needs a new definition for the digital age

Lance Mercereau
Lance Mercereau
29 November 2019

Sometimes, labels can confuse matters.

Take, for example, horizon scanning, a term defined by the OECD as a “technique for detecting early signs of potentially important developments through a systematic examination of potential threats and opportunities.”

For compliance professionals, horizon scanning is the means of tracking regulatory changes such as new regulations, legislations, guidance and updates. Horizon scanning is also the first important step in the compliance lifecycle and sets the tone and the effectiveness of meeting regulatory obligations.

Unfortunately, due to a reliance on legacy solution providers, horizon scanning remains a manual and disparate process in most organizations, requiring compliance teams to dedicate many hours to identify, sift through and read a constant stream of regulatory updates published every day around the world.

This effort is costly, especially taking into consideration the large volume and variety of regulatory publications. The difficulties facing compliance professionals can be seen in the numbers below.

Last month (October 2019) alone, 13 regulators (AFM, DNB, EBA, ECB, EIOPA, ESMA, EU, FCA, FSB, HMT, ICO, PRA, UKP) published 1,039 regulatory updates, which consisted of:

  • 169 publications, 153 United Kingdom Statutory Instruments, 138 press releases, 69 Scottish Statutory Instruments, 62 news items, 47 speeches, 41 warnings, 40 Northern Ireland Statutory Rules, 32 Welsh Statutory Instruments, 27 guidance statements, 25 vacancy announcements, 23 final notices and 33 other types of “regulatory intelligence” such as consultations, legal acts, working papers and policy statements.
  • The five biggest publishers of regulatory updates in October were UK Parliament (274), the UK Financial Conduct Authority (189), the European Banking Authority (132), the European Central Bank (66) and the HM Treasury (62).
  • October 13, 2019, witnessed the most daily publications of the month, with 114.

In addition to tracking specific regulatory developments, compliance professionals also monitor industry developments such as standards bodies, industry best practice, competitors and product innovations.

Yet, due to rapid technological advances, horizon scanning is morphing into much more, with its value recognized by risk, sales and marketing professionals.

One of the newest use cases for horizon scanning is the early identification of emerging risks – risks which may develop, or which already exist that are difficult to quantify and may have a high loss potential or present a new opportunity to organizations.

Identifying emerging risks can be difficult because basic information, which would help adequately assess the frequency and severity of a given risk, is often lacking. Examples of emerging risks that should be on the minds of compliance, risk and other concerned business executives include climate change, cyber risks, artificial intelligence, geo-political and demographic shift.

Modern horizon scanning tools should be used to help inform decisions based on a historical analysis of what’s happening in the world as it relates to your organization, what events are currently taking place now in real-time and what events may take place in the future.

Most importantly, information that isn’t acted on can be a risk, liability or missed opportunity – and we have seen the severe consequence of governments not sharing intelligence. When evaluating horizon scanning tools, you should assess their capability to provide more than just a view into regulatory developments; these tools should provide the full spectrum of intelligence for collaborative use across your entire organization.

To this end, horizon scanning must be embedded into an existing decision support process so there is a seamless flow of unstopped intelligence, ready for consumption and actioned by everyone.

So, the next time someone speaks to you about horizon scanning, expect more by asking him or her what they mean by “horizon scanning.” In all likelihood, it’s a traditional definition of a manual technique that doesn’t factor in the role of technology including Natural Language Processing to automate the large-scale collection of and transformation of millions of publicly sourced data points into a single feed of actionable business intelligence.

Horizon scanning is being reinvented so don’t get left behind by accepting old definitions.

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About RequirementONE

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